Fifty years in Wall Street
has got a few hundred dollars cannot begin to deal in stocks and make a
fortune. The men who don’t succeed are usually those who have spent
their early life elsewhere, and whose habits have been formed in other
grooves of thought.
The business of Wall Street requires long and close training in
financial affairs, so that the mind may attain a flexible facility with
the various ins and outs of speculative methods. If this training is
from youth upward, all the better. It is among this class that many of
our most successful men are to be found, though there are some eminent
examples of success among those who began late in life. It will be
found, however, that the latter must have a special genius for the
business, and genius, of course, discounts all the usual conditions and
auxiliaries; but among ordinary intellects early training is generally
indispensable to financial success.
It seldom happens, moreover, that the early trained man from youth up
does any great wrong.
Ferdinand Ward may seem an exception to this rule, but he had a born
genius for evil, and though he had all the early advantages of Timothy
and Samuel the Prophet, with a higher civilization thrown in, so utterly
incorrigible was his nature that nothing but prison walls and iron bars
could prescribe bounds to his rascality. He is an extraordinary
exception, a genius of the other extreme, against whose subtle
operations society must always be on its guard; but he is only one of
the dangerous exceptions that prove the rule for which I am contending,
the rule that early training in finance more, perhaps, than in any other
field of human energy, is the great desideratum.
If such a man is unsuccessful, dishonor seldom accompanies his
misfortunes. He may pass through the whole catalogue of financial
disasters and their natural results. He may fall to the gutter through
over-indulgence in liquor and the despair attendant on a run of bad lack
or unfortunate connection with wicked partners, but he is still capable
of rising from the very ashes of his former self. He will never stoop to
swindle, no matter how low the rest of his moral condition may be
brought.
No great business can be built up except upon honest and moral
principles. It may flourish for a time, but it will topple down
eventually. The very magnitude to which the business of Wall Street has
grown is a living proof of its moral stamina. It is impossible, in the
social and moral nature of things, to unite a large number of men,
representing important material interests, except on principles of
equity and fair dealing. A conspiracy to cheat must always be confined
to a small number.
The most successful men of Wall Street, to my own personal knowledge,
are those who came to the Street young and have “gone through the mill,”
so to speak; those who have received severe training, who have had some
sledgehammer blows applied to their heads to temper them, like the
conversion of iron into steel.
These are some of the prerequisites of a successful financial career.
One of the most common delusions incident to human nature in every walk
of life is that of a man who has been successful in one thing imagining
he can succeed in anything and everything he attempts. In general,
overweening conceit of this kind can be cured by simple experiments that
bring men to a humiliating sense of their mortal condition and limited
capacity. When the experiment is tried in Wall Street, however, to these
healthy admonitions are frequently added irreparable disaster and
overwhelming disgrace.
I shall note a few examples within the memory of newspaper readers still
living. The brief panic of 1884 brought several instances of this
character to the surface. Some of them had fought our battles for
national existence and preserved the Union when this achievement seemed
almost hopeless. Their fame as generals was as extensive as history
itself. They had planned and executed projects with success on which the
destiny of a great nation, and perhaps the destiny of other nations, had
impended, yet when they attempted to manage banks, railroads and
financial operations they became hopelessly entangled.
The great captain of the Union’s salvation was as helpless as a babe
when Ferdinand Ward and James D. Fish moved upon his works. The eye that
took in the whole situation at a glance at Vicksburg, Richmond and
Appomatox was totally unable to penetrate the insidious and speculative
designs of the “Young Napoleon of finance.”
General Grant was a victim, not so much to the sincere, veracious and
unsuspecting attributes which were so largely predominant in that great
man, as to his want of early training in financial business affairs, and
to the fact that he was unable to appreciate its necessity in dealing
with sharp business men of loose morals. Generals Winslow and Porter
fell into a similar error of judgment in the West Shore Railroad matter.
Their mistake came near being a serious blow to the railroad interests
of this country. General Wilson, of the New York and New England, and
General Gordon were similarly unfortunate. The common mistake committed
by these worthy men, to whom the country owes an inestimable debt of
gratitude, was the chief cause of the “general demoralization,” to which
Treasurer Jordan facetiously but indignantly alluded when denouncing
railroad methods, and which from time to time has played sad havoc with
some of the best securities in the country.
Therefore, I say to all who have sons destined for a business career,
let your cherished offspring have the advantage of early practical
training in the particular line of business for which you may consider
them best adapted, and do so, even to the partial neglect of their
school and college education. Practical business is the best school and
college in which they can possibly graduate. I shall attempt to make
this point clearer in another chapter.
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CHAPTER VI.
WALL STREET DURING THE WAR.
THE FINANCIERS OF WALL STREET ASSIST THE GOVERNMENT IN THE HOUR OF THE
COUNTRY’S PERIL.—THE ISSUE OF THE TREASURY NOTES.—JAY COOKE’S
NORTHERN PACIFIC SCHEME PRECIPITATES THE PANIC OF 1873.—WALL STREET
HAS PLAYED A PROMINENT PART IN THE GREAT EVOLUTION AND PROGRESS OF
THE PRESENT AGE.
Wall Street came to the rescue of the country when the war broke out.
The Government then did not have money enough to pay the interest on the
debt, and was sorely embarrassed for a time. The Hon. S. P. Chase,
Secretary of the Treasury, sent word to Mr. Cisco, the Sub-Treasurer in
New York, to do everything in his power to raise the money required to
sustain the nation’s credit.
Mr. Cisco apprised the “Street” of the instructions he had received from
Washington concerning the empty condition of the Treasury. He showed a
number of the leading operators and financiers that within a few days
the interest on the accruing obligations would have to be paid, or the
Government paper should go to protest. It was clearly demonstrated that
if funds could not be raised the Government should be placed in a
perplexing position, that would, in all probability, greatly complicate
and prolong the struggle for national existence. It was one of the most
critical moments in the whole history of the Republic, and the emergency
required clear, decisive judgment, and promptitude of action.
Wall Street men perceived the gravity of the situation at a glance. If
the Government’s credit should collapse, it was feared that the whole
framework of our political system would be endangered.
The foundation of all securities was threatened with a destructive
upheaval, and most serious consequences were likely to ensue, menacing a
contraction of all values. The prospect was very dark. Not a ray of hope
shone through the sombre clouds that hung dismally over the Union. The
internal dissensions of our people, and the apparent destruction of our
national life, were watched with the deepest interest by European
friends and foes—the latter being then largely in the majority, and only
waiting a favorable opportunity to pounce upon what they considered
their destined prey.
Manifest destiny seemed to have leagued all her forces in opposition to
us. The stoutest hearts quailed at the prospect of our dissolution as a
nation.
At this momentous juncture, when there was no eye to pity, and when no
other arm seemed mighty enough to save, the Wall Street men were equal
to the occasion. They put their heads together, came to the front, and
resolved to extricate the Government from its perilous position. It is
true that they were well paid for it. They charged twelve per cent. for
the loan, but that was nothing when the risk is taken into account. It
was then almost impossible to get a loan at any rate of interest. By
some of the great nations of Europe the risk then involved in such a
loan was regarded in about the same light as the people of this country
now estimate the present chances for realizing on Confederate paper
money, or Georgia bonds of the old issue.
In this state of public feeling, Lombard Street was not in a favorable
mood to negotiate loans with this country, and, the whole fraternity of
the Rothschilds shut their fists on their shining shekels and shook
their heads negatively and ominously at the bare mention of advancing
money to the once great but now doomed Republic.
Money was dear at the time, and the Government was only obliged to pay
what could have been obtained in other quarters. Curiously enough,
private property then was considered better security than the Government
endorsement, on the principle—which was not a very patriotic one, though
in reality true—that the country could survive its form of government.
That form, however, the best the world has yet seen, survived the shock
and maintained its autonomy. That it did so was in a large measure due
to the prompt action of Wall Street men in raising the sinews of war at
the incipient stage of the rebellion. Had they failed to do so, it is
not improbable that the repulse at Bull Run might have proved a decisive
blow to the Union, and plunged the country into a state of anarchy from
which nothing but a despotism almost as bad could have retrieved it.
The negotiation of this loan brought out the twelve per cent. Treasury
notes. After this issue the rates fell. Then came the 11 and the 10¾ per
cent. issues, and subsequently the well-known and long to be remembered
7 3-10 Treasury notes.
After this issue had been popularized, successfully disposed of, and
finally taken up at maturity by the 5-20 loan, Jay Cooke was quick to
issue, after their pattern, his famous 7 3-10 Northern Pacific Railroad
bonds. Evidently he had a patent for negotiating that famous 7 3-10 per
cent. railroad loan, as almost every clergyman, Sunday-school teacher
and public benefactor were found to have invested in them, when the
crash came, and although the road was the means of his financial
downfall, with the ruin of an innumerable number of others besides, who
were dragged into the same speculative whirlpool, this unfortunate event
was not entirely an unmixed evil.
It is true that this was the main and visible cause of precipitating the
panic of 1873, of which I shall speak more fully in another chapter, but
the Pacific road was the great pioneer in opening up the Far West, and
developing its material resources, the great artery of the Western
railroad system, conveying vigorous and durable vitality to the
industrial life of the expansive regions beyond the Rockies.